Specialized skills have become a hot commodity, with companies offering 15-20 percent salary increases to attract candidates with those skills. However, such skills are hard to come by. With good candidates in such high demand, there exist scenarios in which companies go back and forth making offers and counteroffers to them. This creates a bridge which is difficult to cross as the right people are expensive and have the ability to choose the position they want. The increased demand directly correlates to good people finding new opportunities within two weeks. This also creates internal discrepancies in compensation and can lead to turnover despite 73 percent of companies offering raises of 3-6 percent in 2013 and 75 percent who offer incentive-based bonuses of up to 20 percent.

JDA recently surveyed 100 of its candidates on the reasons why they change jobs. The top four were, in order:

Total Compensation

Location and Commute

Cost of Benefits

Work/Life Balance

These, for the most part, are unsurprising. However, several interesting observations can be made. In recent years, there has existed a trend towards total compensation as opposed to base salary. The total compensation package includes benefits and bonuses in addition to the standard base. Through 2012 we witnessed firsthand a trend embracing the performance-based compensation bonuses provide. They also provide companies with a bit of breathing room in instances where money is tight; i.e. variable compensation leaves an extra step before staff must be reduced. Additionally, the percentage of candidates citing work/life balance is interesting. While in the past, this might have referred primarily to longer working hours, globalization has extended this as time differences between employees in different parts of the world virtually necessitate a 24/7 availability and the added stress it brings.

This leaves companies with a difficult choice when filling an open position: they can either train candidates and let them grow into positions, or face positions left open for three to six months or longer in the absence of the ‘perfect’ skill set.

How did we get here?

2012 brought with it a strong adherence to projection. The trends experienced in 2011 and 2012 regarding salary increases and expansions in IT staff are projected to continue through 2013. Houston’s population grew by nearly 275,000 in 2012, and the Houston economy remained strong with 88,000 new jobs created in 2012 with job growth projected to increase by 78,000 in 2013 according to the Houston Business Journal. Oil and gas remained an enormous piece of the Houston economy with 22 of the 25 largest Houston-based corporations operating within the field.

To put this into perspective, 43 percent of our clients are looking to add full-time hires based on their long-term needs and 48 percent project total IT employment including contractors to rise in 2013 over 2012. However, a portion of these doer roles will likely be filled as contract work due to the lack of direct hires. Coupling this with the fact that current IT unemployment is under 4 percent indicates that we will see a large amount of employment churning. Furthermore, the majority of hiring is taking place at higher pay levels. Ultimately, though, this surge in demand for IT work is altering the dynamic of the modern workplace. New technologies are extended to create exciting environments across the already established fields in which we do business.

One example of this is in oil and gas. Houston, as previously mentioned, maintains an economy rooted largely within the oil and gas field. Thus, the impacts of technologies in these areas are of vital importance. Fracking in recent years has led to an oil and gas boom, launching many small companies into the mid-size range. This in turn caused a shift in the already competitive distribution of resources.

While college enrollment in MIS and computer science has steadily increased over the past three years, there remains a lack of three- to seven-year mid-level employees after the sag that followed the burst of the 2000 dot com bubble. Enrollment in IT-related fields saw a steady increase since 2007 where enrollment rates bottomed out at 14 percent of those in 2000, and has since reached half that of the 2000 peak. Adding to this problem is the realization of the adverse consequences of outsourcing, specifically, the disconnect between foreign and local workers, the lack of a hands-on look at issues, and a cultural divide inhibiting remote users’ understanding of business process. 13 percent of Houston-area companies plan to increase levels of outsourced work in 2013, up from 7.2 percent projecting increases in 2012. These companies still plan to outsource despite the known drawbacks which include a higher cost of turnover, higher labor costs, a necessity for greater local talent as business analysts and project managers, and the strain it places on their workers which, in turn, led 6.3 percent of companies to reduce their levels of outsourced work in 2013.

Following the lowest point in enrollment between 2007 and 2010, there now exists a gap in current IT workers. The two- to five-year employee gap seen last year now exists as a three- to seven-year gap with higher numbers of fresh grads taking over the entry-level roles. But, this also led to a shift in dynamic as grads three- to five-years ago were being pulled up quicker, out of necessity. They launched into business analyst roles before there was sufficient time to gain proper experience. What this means is that, as of Q1 2013, the three- to seven-year people just don’t exist.

This goes back to training new, less experienced IT workers into the positions available. While potentially beneficial to the IT worker, the increased overhead is not as easy for companies to shoulder, especially with the alternative being waiting three to six months or more to bring on, likely, overqualified workers.

How JDA Can Help

With over 30 years of experience actively recruiting IT professionals in Houston, JDA is a great resource to indentify and recruit the passive job seeker either full-time or on a contract basis. For more information on how we can help you build a great IT department, contact James Del Monte at 713.548.5444 or jdel (at) jdapsi (dot) com.